Further delay in HSR project could hurt both sides, analysts

Christopher Chitty20 Jul 2018

Analysts urged Malaysia to make clear its position on the Kuala Lumpur-Singapore High-Speed Rail (HSR) project as further delay could prove to be detrimental for both countries.

They believe that postponing the multi-billion-dollar project would only rack up huge costs for both countries while delaying the intended economic benefits like the development of regional areas within Malaysia, reported Today Online.

More: Economic gap between Singapore, Malaysia shrinking: Bloomberg

Malaysia Prime Minister Mahathir Mohamad has reportedly said that his government will try to renegotiate with Singapore the deferment of the mega project – a move described by analysts as not ideal.

Walter Theseira, a transport economist from the Singapore University of Social Sciences, said postponing the project would result to hefty opportunity cost on the investments put into developing the “infrastructure and right of way for the project”.

He noted that land acquired for the rail link, some of which are prime land, would lay unused – leading to large opportunity cost. The Singapore government, for instance, has acquired two recreational plots – the Jurong and Raffles country clubs – to make way for the project.

“Although there haven’t been sizeable infrastructure investments yet, once those start to occur, the depreciation of those investments would be another cost that increases with each delay… Any delay will involve some costs, and obviously, longer delays would tend to incur more costs,” he explained.

Transport Minister Khaw Boon Wan revealed in Parliament earlier in the month that Singapore had spent over $250 million on the project by end-May, with the figure expected to increase to around $300 million by year-end.

Moreover, the longer the HSR project is put off, the longer it will be for Malaysia to enjoy the benefits of development across the areas through which the rail line would pass, said Terence Fan, a transport specialist from the Singapore Management University (SMU).

Singapore, on the other hand, will be denied the benefit seen from the greater movement of people between the two states.

Meanwhile, contractors who have invested time and financial resources into the project would be “annoyed” as the project is marred by “too much political uncertainty”, said Asia Rail Engineering’s engineering director Phillip Peachey. This places future projects between Singapore and Malaysia at risk as contractors may be hesitant at placing bids.

Although analysts expect Singapore to “see what it could do to accommodate” its neighbour’s request in the interest of good relations, they do not expect the city-state to accept a fundamental change in the agreement as this would put Singapore in a bad light.

“If we’re seen as pushovers such that people can renege on their original agreement, then in future, other countries will not take us seriously on the world stage,” said SMU law lecturer Eugene Tan.

He noted that the city-state would want “to promote the sanctity of these agreements, because our position is, of course, that the agreements were properly entered into and both countries had the benefit of advice, ranging from legal to non-legal”.

Ultimately, however, “a lot depends on the Malaysians providing further and better particulars as to what it is that they want”, said Tan.


Senior Content Producer, Christopher Chitty edited this story


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